A balanced portfolio with significant exposure to socially responsible investments

Report created on Jan 24, 2025

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

4/5
Broadly Diversified
Less diversification More diversification

Positions

This portfolio is composed of three ETFs, with a substantial 60% allocation to the iShares MSCI World SRI UCITS ETF. The remaining 40% is split equally between Europe and Emerging Markets SRI ETFs. This composition suggests a focus on socially responsible investments (SRI), aligning with global trends. The broad diversification across regions and sectors is notable, but the portfolio is heavily weighted towards equities, which can introduce volatility. To enhance diversification, consider incorporating other asset classes like bonds or real estate, which may provide stability during market fluctuations.

Growth Info

Historically, this portfolio has achieved a Compound Annual Growth Rate (CAGR) of 11.84%, which is commendable. However, it also experienced a maximum drawdown of -32.80%, indicating significant volatility. This performance suggests that while the portfolio has been rewarding, it has also been susceptible to market downturns. Comparing this to a benchmark, the returns are competitive, but the risk level is higher. To mitigate such risks, consider strategies like diversification or rebalancing, which can potentially protect against future downturns.

Projection Info

Using Monte Carlo simulations, the portfolio shows a range of potential outcomes. This method uses historical data to predict future performance, with 962 out of 1,000 simulations resulting in positive returns. The median simulation projects a 229.4% return, suggesting robust future growth potential. However, remember that these simulations are not guarantees; they merely provide a range of possible outcomes. Regularly reviewing and adjusting the portfolio based on changing market conditions can help align actual performance with these projections.

Asset classes Info

  • Stocks
    99%

The portfolio is heavily skewed towards equities, with 99% allocated to stocks. This concentration in a single asset class can lead to increased risk, especially during market downturns. While equities offer growth potential, incorporating other asset classes like bonds or cash can enhance diversification and reduce volatility. Diversifying across asset classes can help balance risk and return, ensuring a more resilient portfolio that can weather various market conditions.

Sectors Info

  • Technology
    27%
  • Financials
    17%
  • Consumer Discretionary
    12%
  • Telecommunications
    10%
  • Industrials
    9%
  • Health Care
    9%
  • Consumer Staples
    6%
  • Basic Materials
    3%
  • Energy
    3%
  • Real Estate
    2%
  • Utilities
    2%

Sector allocation is diverse, with a notable 27% in technology, followed by financial services at 17%. This tech-heavy focus may lead to higher volatility, especially during periods of interest rate changes or tech sector downturns. While the sector composition aligns with global benchmarks, it's essential to monitor sector trends and adjust allocations as needed. Diversifying further into underrepresented sectors could enhance stability and reduce reliance on any single industry.

Regions Info

  • North America
    59%
  • Europe Developed
    21%
  • Asia Emerging
    8%
  • Asia Developed
    7%
  • Africa/Middle East
    2%
  • Latin America
    2%

Geographic allocation is broad, with 59% exposure to North America, followed by 21% in developed Europe. This allocation aligns with global benchmarks, providing a solid foundation for diversification. However, emerging markets are underrepresented at 8%, which might limit potential growth opportunities. Increasing exposure to emerging markets could enhance diversification and capitalize on growth in these regions, balancing the portfolio's geographic risk and return profile.

Market capitalization Info

  • Large-cap
    42%
  • Mega-cap
    34%
  • Mid-cap
    22%
  • Small-cap
    1%

The portfolio's market capitalization is well-distributed, with 42% in large-cap and 34% in mega-cap stocks. This balance provides stability, as larger companies tend to be less volatile. However, there's minimal exposure to small-cap stocks, which could offer higher growth potential. While small caps come with higher risk, they can enhance diversification and growth prospects. Consider a slight increase in small-cap exposure to capture potential upside while maintaining overall stability.

Risk vs. return

This chart shows the Efficient Frontier, calculated using your current assets with different allocation combinations. It highlights the best balance between risk and return based on historical data. "Efficient" portfolios maximize returns for a given risk or minimize risk for a given return. Portfolios below the curve are less efficient. This is informational and not a recommendation to buy or sell any assets.

Click on the colored dots to explore allocations.

The portfolio can be optimized for a better risk-return ratio using the Efficient Frontier concept. This optimization suggests that with the current risk level, a return of 14.46% is achievable, compared to the current expected return. By adjusting allocations among existing assets, it's possible to enhance returns without increasing risk. This approach focuses on achieving the best possible balance between risk and return, ensuring the portfolio is well-positioned for future growth.

Ongoing product costs Info

  • iShares MSCI World SRI UCITS ETF EUR (Acc) 0.23%
  • iShares MSCI Europe SRI UCITS ETF EUR (Acc) 0.20%
  • iShares MSCI EM SRI UCITS ETF 0.25%
  • Weighted costs total (per year) 0.23%

The portfolio's total expense ratio (TER) is 0.23%, which is relatively low and supports long-term performance by minimizing cost drag. Keeping costs low is crucial for maximizing returns over time, as high fees can erode gains. This cost efficiency aligns well with best practices in portfolio management. Regularly reviewing and comparing costs with similar investment options can ensure continued cost-effectiveness and enhance overall returns.

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